Venture Capital Funding Report 1H19
The total amount of venture capital investments in China was CNY 295 billion, down by 60% YOY. Particularly, investments in recreation, consumer, financial and real estate sectors have been reduced by 50%.
As the first half of 2019 officially ended, EO Intelligence analyzed the venture capital investments in China in 1H19. Going forward, we will continue to update notable fundraising events in both domestic and international capital markets.
1) As of June 30, 2019, there were 1,825 startup investments in China during 1H19, totaling CNY 295 billion and down by 60% YOY. Investments in recreation, consumer, financial and real estate sectors have declined by almost 50%.
2) 378 investments were made in the technology sector with an amount of CNY 37.270 billion. Specifically, investments in the auto sector ranked first, with 111 investments totaling CNY 58.5 billion.
3) 91 transactions exceeded USD 100 million, reaching a total value of CNY 204.163 billion and accounting for 69.19% of total startup investments.
4) Tencent has made 36 investments over the period and has become the most active investor while Alibaba has invested the highest amount, reaching CNY 38.54 billion.
Macro condition: The total amount of financing has decreased to CNY 295.09 billion from CNY 733.38 billion in 1H18. Total number and value of financing were down by 48% and 60% YoY, respectively. Excluding a few large-scale financing occurred last year (USD 44 billion investments in Wanda Commercial Real Estate, USD 14 billion investments in Ant Golden Wear, USD 13 investments billion in Home and USD 3 billion investments in Zhongxin South), the total amount of investments were still lower by 47%. The largest transaction so far was the one made by Alibaba and SoftBank, the USD 3 billion investments to Alibaba's life service business. The startup which obtained the second largest investment was Chehaoduo (车好多), a used-car platform.
The number of investments in recreation, consumer, financial and real estate sectors has reduced by almost 50%. While the dollar amounts of investments were flat in those sectors, the dollar amount of investments in the financial sector has declined the most significantly.
378 investments were made in the overall technology sector with an amount of CNY 37.270 billion. In particular, investments in the automotive vertical came first, with 111 investments totaling CNY 58.5 billion.
Financing rounds: Most investments were in the A-round which included Pre-A, A and A+, accounting for 37.81% of total investments made. Only 9.48% of investments were in the middle and late stages after the C-round, including 48 D/D+rounds, 7 E-rounds and 9 F-rounds before IPO.
Value of investments: Excluding some undisclosed investment data, there were 91 transactions exceeding USD 100 million, totaling the amount of CNY 204.163 billion and accounting for 69.21% of total investments. 63 investments exceeding or equal to 1 billion yuan, reaching CNY 182.934 billion, with CNY 2.97 billion investments per company on average. Furthermore, there were 346 of transaction with less than CNY 1 billion and more than CNY 100 million, with a total amount of CNY 86.769 billion. 1,416 transactions were made with less than 100 million yuan occurred, totaling CNY 25.389 billion.
Over 1H19, investments in China's venture capital markets were mainly in the technology, healthcare and enterprise services sectors. Particularly, large-scale investments were made in the areas of automobile, retail and technology. For investments which exceeded USD 10 million, there were 88 transactions in technology and 83 cases in healthcare. For investments which exceeded CNY 1 billion, there were 14 transactions in auto, 8 in healthcare and technology and 6 in consumer.
Top institutional investors
Tencent, IDG capital, Matrix Partners China and Sequoia China remained the top four active investors in the first half of 2019. Together, they have made more than 20 investments. Shenzhen Venture Capital and K2VC ranked No.5 and No.6, respectively. No.20 investor only made 11 investments over the period. The venture capital markets remained relatively soft.
We took a look at the top 20 investors and found that there were 53 cases in technology and enterprise services sectors while logistics and furniture were less favored by investors. Shenzhen Venture Capital overweighted tech with a total of 10 investments in the tech sector and Tencent overweighted enterprise services and recreation fields.
Although this year's venture capital markets remained quiet compared to last year’s, there was still a decent amount of large-scale investments. Capital has flowed to mainstream enterprises. Looking at the top 20 investments in 1H19, there were familiar names including Lalamove (货拉拉), Beidan (贝店), SHUIDIHUZHU (水滴互助), Penguin Almonds (企鹅杏仁), punctual arrival (准时达), etc. Below is the list of top 100 venture investments in 1H19, excluding strategic investments in public companies.